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New Study Outlines Plan for 26% CO2 Reduction from U.S. Power Sector with No Net Cost to the Economy

April 30, 2014

A new study by ACEEE outlines how energy efficiency could be used in an upcoming standard by the U.S. Environmental Protection Agency to reduce CO2 levels with no net cost to the economy. The standard, currently under review by the White House Office of Management and Budget and likely to be released in early June, would set a CO2 emissions limit for existing power plants under Section 111(d) of the Clean Air Act.

The study shows how the Environmental Protection Agency could use four common energy efficiency policies to set a carbon pollution standard that reduces emissions to 26% below 2012 levels. In 2030, these policies would save 600 million tons of greenhouse gas emissions, save over 925 million MWh of electricity, reduce electricity demand by 25%, and avoid the need for 494 power plants.

“If the Environmental Protection Agency is looking for a way to cheaply cut carbon pollution and boost the economy while giving states the freedom to use their energy resources, energy efficiency is the answer,” said ACEEE executive director Steven Nadel.

Furthermore, adoption of these policies would significantly boost the economy, increasing the national gross domestic product by $17.2 billion and creating 611,000 new jobs across the country in 2030. This number includes people employed in jobs directly related to energy efficiency like home contractors and construction, and people like small business owners and their employees who benefit as money saved is spent back into the local economy.

“Energy efficiency is a proven economic driver that can help states already committed to reducing their energy waste, leveraging American ingenuity to create jobs while cleaning up the air,” said Richard Caperton, director of national policy and partnerships at Opower.

Compliance with a new CO2 standard for existing power plants will ultimately fall to the states. Including energy efficiency in the standard as a way to meet the CO2 reduction targets will allow states more flexibility as they find ways to manage their energy portfolios.

The good news is that the energy efficiency technologies included in the plan have already been tested and are ready to be deployed. The vast majority of states already take advantage of some end-use energy efficiency programs and policies, and all states have vast untapped reserves of this resource.

The four policies included in the plan are: setting a state energy savings target of 1.5% per year, implementing updated national model building codes, constructing economically attractive combined heat and power facilities, and adopting standards for five appliances.

Since the 1970s, energy efficiency has been a major contributor to the U.S. energy landscape. Previous research by ACEEE found that economy-wide improvements in energy efficiency contributed to a more than a 50% reduction in U.S. energy use relative to what it would have been if pre-1973 trends continued. Economy-wide improvements in energy efficiency, along with structural changes in our economy, supplied more energy than domestic coal, natural gas, and oil combined.

Another recent report by ACEEE also found that energy efficiency is the lowest-cost electricity resource for utilities. Programs aimed at helping customers save energy cost utilities only about three cents per kilowatt hour, while generating the same amount of electricity from burning coal or natural gas can cost two to three times more.

“Energy efficiency is the ultimate resource: clean, reliable, and cheap,” said the new study’s lead author, Sara Hayes. “The Environmental Protection Agency has the opportunity to improve our air quality and our economy in one fell swoop.”

To read the study,Change is in the Air: How States Can Harness Energy Efficiency to Strengthen the Economy and Reduce Pollution, visit: aceee.org/research-report/e1401

The American Council for an Energy-Efficient Economy acts as a catalyst to advance energy efficiency policies, programs, technologies, investments, and behaviors.

For more information:

Organization:
American Council for an Energy-Efficient Economy (ACEEE)Address: 529 14th Street N.W., Suite 600Washington, District of ColumbiaUnited States, 20045-1000www.aceee.org